Chinese Money in the U.S. Dries Up as Trade War Drags On

Re:Chinese Money in the U.S. Dries Up as Trade War Drags On by dahdum on Sunday July 21, 2019 @03:29PM (#20493172)

Deflation doesn't cause people to behave irrationally. The problem is that rational reactions to deflation such as hoarding cash, avoiding debt, and cutting spending become a drag on the economy.

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Re:Chinese Money in the U.S. Dries Up as Trade War Drags On by ced on Sunday July 21, 2019 @06:21PM (#20494035)

hoarding cash, avoiding debt, and cutting spending

Most of the people around here immediately buy something as soon as "they can afford it" - with credit. I find it hard to believe that these same people would suddenly hoard cash.

Wikipedia says

The Great Depression was regarded by some as a deflationary spiral.[35] A deflationary spiral is the modern macroeconomic version of the general glut controversy of the 19th century. Another related idea is Irving Fisher's theory that excess debt can cause a continuing deflation. Whether deflationary spirals can actually occur is controversial, with their possibility being disputed by freshwater economists (including the Chicago school of economics) and Austrian School economists.

It sounds more like a theoretical concern than an immutable law of nature to me.

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Re:Chinese Money in the U.S. Dries Up as Trade War Drags On by bmurphy1976 on Monday July 22, 2019 @07:08PM (#20503122)

That's kind of my point. Those are not rational reactions during a deflationary period but that's what people will do anyway.

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Re:Chinese Money in the U.S. Dries Up as Trade War Drags On by dahdum on Tuesday July 23, 2019 @03:15PM (#20509360)

They are rational for individuals acting in their own self-interest, and that's what economic theory is based on.

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